(Solved): Suppose there are two firms, \( A \) and \( B \), with marginal abatement costs \( M A C a=100-E a ...

Suppose there are two firms, \( A \) and \( B \), with marginal abatement costs \( M A C a=100-E a \), and MACb=200-3Eb, respectively. (Ea and Eb are firm A and firm B's emissions respectively.) The marginal damage caused by the emissions is given by \( M D=E a+E b \). If there is a tax of 80 on each unit of emissions, the outcome is cost-effective and efficient. True False 2: Suppose in a one-off, simultaneous game, player 1 chooses between \( A \) and \( B \), and player 2 chooses between \( C \) and \( D \). The payoff matrix is given above. This game does not exhibit the same type of dilemma as in a "prisoner's dilemma" game.|